The End of Big-Government Conservatism

Nixon, Ford, and both Bushes expanded the state and shrank their party.

By: W. James Antle III

Despite George W. Bush’s many failures as president, in one area he was an unqualified success: demonstrating the impossibility of big-government conservatism. For decades, clever pundits and Republican apparatchiks have been touting this self-evident oxymoron as the path to political success. After eight years in practice, it has proved to be the road to irrelevance and ruin—politically as well as financially.

Ideologies that celebrate the swollen state while traveling under the name “conservative” are nothing new. As the Old Right faded into the modern American conservative movement, Eisenhower-era “Modern Republicans” preached a “dynamic conservatism” that was to be “conservative when it comes to money and liberal when it comes to human beings.” This was followed by the Rockefeller Republicanism of the 1960s, which was essentially Kennedy-Johnson Democratic politics for the country club. Later, the neoconservatives sought to instill reverence for their old patron saints FDR, JFK, and LBJ among their new Republican allies.

But the big-government conservatism of the Bush era pretended to be a continuation of the American Right’s limited-government traditions rather than a Tory socialist repudiation of them. It promised low taxes, less regulation, and free markets, an “ownership society” instead of a cradle-to-grave welfare state. President Bush contrasted his vision with that of the Democrats: “a government that encourages ownership and opportunity and responsibility, or a government that takes your money and makes your choices.” What this new conservatism did not aim to do, however, was directly reduce government spending.

Why? Because spending cuts were for “green eyeshade” proponents of austerity, political losers. Since World War II, Republicans have launched direct assaults on federal domestic spending three times: the “Do Nothing” 80th Congress of 1947-48, which under the leadership of Sen. Robert Taft slashed even military spending; the 97th Congress of 1981-82, which approved the less ambitious—but still terrifying for liberals—Reagan budget cuts; and finally the 104th Congress of 1995-96, Newt Gingrich’s “Republican Revolution,” which dared to propose slower spending increases for Medicare.

Republicans suffered losses at the ballot box each time. In 1948, the GOP lost its House and Senate majorities—the party’s first since the early 1930s—and unpopular President Harry Truman won re-election in no small part by running against the Do Nothing Congress. Republicans lost 26 House seats in 1982, though the party’s hold on the Senate and the presidency remained intact. In 1996, Bill Clinton replicated Truman’s death-defying feat by winning what once seemed an improbable second term as he promised to protect spending on “Medicare, Medicaid, education, and the environment” from the Gingrich Congress. The Democrats also picked up eight House seats.

In response to this last Republican setback, George W. Bush’s political circle formulated “compassionate conservatism” as a marketing slogan for the idea that voters could have their tax dollars and eat them, too. Fred Barnes, the political reporter and Weekly Standard executive editor who popularized the term “big government conservatives,” still describes them best. “They simply believe in using what would normally be seen as liberal means—activist government—for conservative ends,” Barnes wrote five years ago, “And they’re willing to spend more and increase the size of government in the process.” That means accepting or even expanding the social-welfare programs that Democrats built while channeling the dollars toward faith-based initiatives, abstinence-only sex education, marriage-promotion schemes, and other projects amenable to GOP constituencies.

“The essence of Bush’s big government conservatism is a trade-off,” Barnes continued. “To gain free-market reforms and expand individual choice, he’s willing to broaden programs and increase spending.” Grand New Party authors Ross Douthat and Reihan Salam put it a bit differently: “Rather than target the ‘supply-side’ of government, or the amount of government spending, Bush’s focus was on the ‘demand-side,’ or the need for government services.”

Unfortunately, it did not work out this way in practice. The ballyhooed prescription-drug benefit added at least $8.7 trillion to Medicare’s unfunded liabilities and No Child Left Behind helped drive an 18 percent annual increase in federal education spending, each without even the meager “free-market reforms” initially proposed. Domestic discretionary spending—excluding all homeland-security expenditures, even though they deserve to be included—increased more between 2001 and 2006 than during Clinton’s entire eight years in office.

None of the “conservative” reforms diminished the demand for government services the way welfare reform reduced the welfare rolls in the 1990s. By 2006, enrollment in 25 major federal programs—from Medicaid to Pell Grants—had increased 17 percent over 2000, while the population increased by just 5 percent over the same period. The economy played a role, but so did the demand-side logic of big-government conservatism: To help encourage work over welfare, Congress has expanded eligibility for some other public aid programs. Allowing low-income workers who own cars worth more than $4,650 to qualify for food stamps extended the benefit to an estimated 2.7 million people, buying more “independence” from one program with greater dependence on another.

By the end of Bush’s term, the Republican Party was identified with costly bailouts of Wall Street and the automobile industry, to say nothing of precursors to Barack Obama’s $800 billion stimulus package. There were honorable holdouts among congressional Republicans—the Wall Street “rescue” had to be passed with Democratic votes; the Big Three bailout was stalled by Senate Republicans—but the end result was that a Republican president helped transform a $128 billion annual budget surplus into a $1.2 trillion deficit.

If big-government conservatism was a failure on its own terms as policy, it has proved equally disastrous politically. In just four years, unified Republican control of the elected branches of the federal government has been replaced with Democratic dominance. Republicans have lost 50 House seats in the last two elections and Democrats are just one vote away from a filibuster-proof 60-seat Senate majority. Obama, once arguably the most liberal senator, won 53 percent of the vote—more than either Clinton or Jimmy Carter ever drew while pretending to be moderates. The GOP has been knocked down to pre-1994 levels in Washington. According to some polls, identification with the Republican Party is down to pre-Reagan levels.

At this point, Rovian spinners would surely protest that things would have been much worse if Bush had tried to cut spending. Republicans would have lost their majorities even earlier if they tried to touch Medicare like Gingrich or Social Security cost-of-living adjustments like Reagan. Bush might not have been re-elected, they argue, if he hadn’t signed the Medicare prescription-drug benefit or No Child Left Behind. But these were short-lived gains at best.

By 2006, the Democrats had regained their traditional advantages on education and Medicare. In fact, they were claiming that Republicans were shortchanging seniors by not including price controls in the drug benefit and shafting children by leaving No Child Left Behind underfunded. Just as was the case with the Bush immigration amnesty gambit, the Republicans did not expand their party’s base. They merely entered into a bidding war with the Democrats that they could not win.

Worse, big-government conservatism contributed to the major national problems that tore down the Republican majorities. Bush initiatives to increase minority home ownership and give loans to borrowers with bad credit helped fuel the housing bubble, which has since painfully burst. Like Clinton before him, Bush encouraged the Federal Reserve’s loose monetary policies and artificially low interest rates. His borrow-and-spend fiscal policies necessitated the printing of more money. And let us not forget the staggering political costs of the war in Iraq, the biggest big-government conservative project of them all.

The political case for big-government conservatism was always suspect. Republicans held onto both houses of Congress and actually gained two Senate seats after the government shutdown in 1996. Republicans held onto a 54 to 46 Senate majority after the Reagan budget cuts in 1982, and President Reagan himself was reelected in 1984. Even the small-government losses of the Taft Republicans in 1948 and Barry Goldwater in 1964 paid dividends for the conservative movement over the long term, the first by staving off a European-style social democracy and the second by facilitating a conservative takeover of the Republican Party.

By contrast, big-government Republicans Richard Nixon, Gerald Ford, George H.W. Bush, and George W. Bush were all followed by unified Democratic control of the federal government. Dwight Eisenhower—though admittedly a taxpayer’s best friend compared to Bush—was followed by John F. Kennedy. Rockefeller Republicanism proved good for politicians like Nelson Rockefeller but never helped the GOP as a whole out of its minority status. Unlike the Rockefeller Republicans, however, the mainstream conservative movement embraced big-government conservatism as practiced by Bush because it continued to promise tax cuts.

Yet the era of tax cuts without spending cuts is coming to a close. Even in the extremely unlikely event that President Obamafails to enlarge our public spending commitments—and even without counting the Troubled Assets Relief Program or the bailouts of Fannie Mae and Freddie Mac—federal spending is scheduled to rise to 24 percent of GDP in 2020 and 40 percent by 2050. All that is needed is for the Baby Boomers to retire and existing government programs to continue to grow on autopilot. Borrowing is off the table with $1 trillion annual deficits as far as the eye can see and $50 trillion in unfunded liabilities for the major entitlement programs. Without spending cuts, federal tax revenues will need to rise by at least 4 to 7 percent of GDP per year for the next 20 years.

That translates into a $550 billion to $700 billion tax increase in today’s dollars. And that’s assuming the Obama administration does not grow government beyond the levels already demanded by current law and the country’s demographics. Forget any future tax relief or saving the Bush tax cuts, which are already scheduled to expire in 2011. Big government will make conservatism—at least the kind of economic conservatism Republicans have campaigned on since the 1980s—mathematically impossible.

Ronald Reagan succeeded in driving down confiscatory marginal income tax rates, a signal political achievement of the conservative movement. But he failed to shrink the federal government, despite early efforts to contain domestic spending. Reagan won a 9.7 percent cut in inflation-adjusted nondefense domestic discretionary spending during his first term, only to watch such outlays rise by 0.2 percent in his second. Military expenditures and entitlement spending grew throughout his presidency, contributing to record deficits.

The Reagan tax cuts helped promote dazzling growth with some noticeable Laffer Curve revenue re-flow effects, convincing many conservatives that supply-side economics offered them a way to cut taxes while leaving most major spending programs intact. In truth, public concern about rising deficits led to erosions of the tax cuts almost as soon as they were enacted. The business tax cuts were diluted in 1982, Social Security taxes went up in 1983, and the top marginal income tax rate—lowered all the way to 28 percent in 1986 from a once-staggering 70 percent—was raised in 1990 and 1993. Even after the Bush tax cuts, the top income tax rate remains higher than it was when Clinton took office.

By briefly offering what David Frum described as “post-Great Society government at pre-Great Society prices,” the Reagan years deluded conservatives into believing that deficits—and big government—don’t matter. In fact, the spending increases nearly jeopardized all the work Reagan did to lower tax rates. Yet it took George W. Bush to illustrate the contradiction most clearly: Bush’s record on spending was much worse than Reagan’s, and so was his rhetoric. Reagan’s speeches kept conservatives focused on the evils of government growth even when his actions did not.

“There’s a clear cause and effect here that is as neat and predictable as a law of physics,” Reagan said in his farewell address to the nation in January 1989. “As government expands, liberty contracts.” This is a sharp contrast with Bush’s famous line, “When somebody hurts, government has got to move.” The American people agreed and voted Democratic.

Something is hurting, all right: conservatism in a new era of bipartisan big government. Smaller government—preferably returning to the limits imposed by the U.S. Constitution—is the only cure. Those who would lead the Republican Party must be judged by that standard.